Why I'm Investing in Bitcoin

This doesn't have anything to do with activism. I don't think Bitcoin has much potential for facilitating progressive social change. It can be used to help fund a small set of groups, like Wikileaks, that aren't allowed to use conventional funding from Paypal. However for funding very radical organizations (say a left-wing guerilla group or a domestic radical left group like the Earth Liberation Front), the lack of privacy in Bitcoin due to its use of a public ledger - makes it unlikely to work. If at any point your bitcoin address can be linked to your identity, then you lose privacy. So I primarily see Bitcoin as a means for a small set of early adopters (primarily 18-30 year old men, notably lots of libertarians and computer developers) to get very rich and generally annoy the financial sector.

As an over 30 year old computer developer (with a background in economics), I'm trying to make some money.

Originally I was very skeptical about Bitcoin. So after the big run-up from $1 to $32 in June 2011, and I made a tiny amount of money shorting it down to around $2.20 in 2011 (I stopped shorting within 20-30 cents of the 2011 bottom). I would have shorted more (perhaps $1000), but I didn't have enough trust in any of the websites offering the service to risk significant funds. Turns out this was a wise prediction as I later moved more money on to Bitcoinica and proceeded to lose half of it when the website got hacked and went bankrupt!

Fast forward to 2013, I decided to trust Bitfinex to loan my money out to other users who wanted to take long positions in Bitcoin. For most of 2013, I focused on lending out my money and was rewarded with very high interest rates (typically 30-300% APR). During 2013, Bitfinex successfully managed to survive several flash crashes without losing any of the loaned out funds and proved to be a relatively trustworthy company. I also made a lot of money when I randomly bought 2 bitcoins at around $120 and the price skyrocketed to $1100 (I sold at $700).

I started off 2014 planning to lend more money out on Bitfinex and to content myself with, what I expected would be, declining interest rates (APR heading to 20%). However at some point along the road, I tried to transfer money into my account by buying Bitcoins on Coindesk and transferring them to Bitfinex - with the expectation that it would be cheaper than doing an international wire (Coindesk charges a 1% fee, international wires are $40-$50 at my bank). Unfortunately Coindesk doesn't deliver the bitcoins until several days later and by the time I got them the price had started to fall.

So I ended up with several Bitcoins and bought more as the price went down. Sometime in mid-March, I decided that Bitcoins were undervalued and I bought more on the way down.

At the April $340 bottom, I both felt extremely bad to have ever risked holding bitcoins in the first place AND I was also feeling that it was a great time to buy even more. Of course I had given up buying any more in the upper 400s - as there was only so far I was prepared to go.

Fast forward to today and I'm pretty happy because I'm up 15-20% on my buy-in position and I'm currently earning 0.2%/day interest on the money I'm lending out for swaps.

Reasons for Bitcoin
-Powered by a great community of smart people. You're investing in the community, not the algorithm.
-Regular conferences around the world
-Crazy number of start-ups. Most fail, but some succeed.
-Credit card companies and other payment processors make billions in fees. The industry is in for a shakeup.
-Massive international remittance market (workers sending back money to their home country) which won't be easy until there are international agreements including 100 countries.
-A vehicle for speculation. Wall Street loves to gamble. Thousands of people are day-trading FOREX (foreign exchange) - mostly without a clue. Global capitalism has an increasing financial speculation sector and Bitcoin fits right in.
-The US government accepts it. Expect relatively favorable regulation from pro-corporate politicians soon.
-There is a sizable black and grey market, along with legal markets where people want more privacy, which Bitcoin can be used for (Silk Road 2, drugs, gambling, porn, VPNs, etc). This assumes that the government or another entity doesn't break Bitcoin's privacy options - which is possible. It may be that Bitcoin is replaced by a more privacy friendly coin, like Darkcoin.
-Almost all of the competing alternative coins have failed. Bitcoin is 90% of the market and has a natural monopoly due to the network effect (the value of a network is proportional to its size squared).
-A centralized payment processor (like Dwolla) could take on Bitcoin and be more efficient, however businesses are less likely to trust a centralized payment processor (why be the first company to take payments from Dwolla - how do you know that anyone will use it? By contrast with Bitcoin, if you take payments you currently have a million people who use it.)
-It's survived a ton of scams. Bitcoin is very resilient.
-Major companies are accepting it: including Overstock.com, TigerDirect, and the Dish Network.